Forecast

FuelCell completes sale of UB plant

Alexander Soule| on
February 27, 2015

FuelCell Energy has completed its sale to NRG Yield of a 1.4-megawatt fuel cell power plant project at the University of Bridgeport, which committed to a lengthy power purchase agreement with the NRG Energy spinoff.

Danbury-based FuelCell Energy (Nasdaq: FCEL) will operate and maintain the plant, with service expected to commence in March supplying electricity and heat to about 80 percent of the buildings on the University of Bridgeport campus, including the student center, dining hall and on-campus police station. The system is configured as a micro-grid to operate independently of the electric grid, giving the campus a bulwark against any wider power outages.

FuelCell Energy has scheduled March 11 for the release of its first-quarter fiscal results, coming off a 2014 fiscal year in which revenue dipped 4 percent to $180.3 million from the previous year, and its net loss worsening 10 percent to $38.9 million.

POSCO Energy holds a controlling stake in FuelCell Energy, which has been supplying POSCO with fuel cell kits to assemble for a massive power plant in South Korea, where it is located.

Closer to home, FuelCell Energy's Torrington factory has been producing systems for Dominion's Bridgeport Fuel Cell Park, with a projected output of nearly 15 megawatts of electricity, sufficient to supply the electricity needs of anywhere between 10,000 and 15,000 households. The project was cited last December as the largest fuel cell installation in North America.

"Dominion informed me that the park's availability in excess of 90 percent is among the highest in its 23,000-megawatt portfolio," said FuelCell Energy CEO Chip Battone during a December conference call. "We received three contracts from United Illuminating in ... 2014 for more than $75 million of grid-support applications. High-profile customers like Dominion and UI are validating our solutions."

FuelCell Energy indicated it might use the business model in the University of Bridgeport contract for future deals, working out a "pay-as-you-go model with a financial intermediary owning the asset," in the words of Michael Bishop, chief financial officer of FuelCell Energy. Princeton, N.J.-based NRG Yield (NYSE: NYLD) went public in July 2013; since then, in addition to the 12-year contract it reached with the University of Bridgeport with a seven-year option, it also has an agreement to purchase a Colorado wind farm that uses 35 turbines from Fairfield-based General Electric (NYSE: GE).

FuelCell reported having about 620 full-time employees as of last October, including 270 in Danbury and just over 300 in Torrington, and a small number of temporary workers. A planned expansion of the Torrington location will add 90,000 square feet, to be followed by a second phase as demand dictates in which the plant's capacity could be expanded to produce systems totaling 200 megawatts, from half that amount today.